FSC bans banks using bitcoins

The Financial Supervisory Commission (FSC) yesterday banned banks and other financial institutions from bitcoin conversion or using the virtual currency as a payment tool via automatic teller machines (ATM).

The move was made in response to local media reports that ATMs providing bitcoin conversion and payment services are marching into Hong Kong and Taiwan to meet strong demand in Asia.

“Financial institutions may not accept bitcoins or provide conversion in an effort to avoid consumer disputes and related trading risks,” the commission said in a statement.

People who intend to hold or invest in bitcoin must understand it is merely a virtual commercial product not entitled to the legal protections of a real currency, the commission said, warning against its use for the second time in a week.

In October last year, young entrepreneurs opened what they called the world’s first ATM able to exchange bitcoins for any official currency in Vancouver, Canada.

A Taiwanese online shopping service operator earlier announced plans to accept the virtual currency on its shopping site.

Separately, the commission defended its recent decision to allow China’s policy banks and select enterprises to issue yuan-based bonds in Taiwan, saying the opening will not increase exposure to China.

The regulator said it keeps the issuance at 10 billion yuan (US$1.65 billion), accounting for a tiny fraction of 150 billion yuan deposits in Taiwan and the total outstanding loans of 132 trillion by Chinese banks.

Instead, the liberalization may help local financial institutions to digest yuan deposits and invigorate the local bond market, the commission said.